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Optical/IP

Tut to Acquire Copper Mountain

Apparently trying to collect 'em all, Tut Systems Inc. (Nasdaq: TUTS) Friday evening announced plans to acquire troubled broadband equipment vendor Copper Mountain Networks Inc. (Nasdaq: CMTN) for $10 million in stock.

The announcement follows Tut's $24 million agreement to pick up another troubled vendor: CoSine Communications Inc. (Nasdaq: COSN), maker of secure IP switches. Both CoSine and Copper Mountain had laid off nearly all employees, conserving cash while trying to negotiate deals (see CoSine Cuts to the Bone and Copper Mountain Runs Dry). Tut has agreed to put up 2.5 million shares in exchange for Copper Mountain (see Tut to Acquire Copper Mountain). With Tut shares closing at $4 on Friday, the deal was worth exactly $10 million.

Assuming the deals go through, Tut would own a broadband remote access server (B-RAS) and an IP services platform. What's Tut got to do with it? The company sells equipment for video transmission, including the broadcast TV market and TV-over-IP -- the latter being an area where CoSine could become useful. Tut also has a line of broadband-over-copper products that Copper Mountain could augment.

Then again, Tut said it bought CoSine primarily for that company's $22.75 million stash of cash, with no plans yet to integrate CoSine technology (see Tut Takes On CoSine).

It's conceivable that Copper Mountain is another cash grab. The company had $9.1 million in cash and $8 million in short-term investments as of Sept. 30, according to SEC documents (see Copper Mountain Runs Dry). Tut itself had $14.4 million in cash and equivalents as of Dec. 31.

The CoSine deal, meanwhile, faces a potential legal hassle in the form of a lawsuit accusing CoSine officers and directors of self-dealing and breach of fiduciary duties (see CoSine Deal Challenged in Court).

Tut has scheduled a conference call for 8:30 a.m. Eastern time on Monday, Feb. 14, to discuss the Copper Mountain deal.

— Craig Matsumoto, Senior Editor, Light Reading

readingsbelieving 12/5/2012 | 3:26:44 AM
re: Tut to Acquire Copper Mountain Tut acquiring CM for its CASH?? That would be like buying a house while it's on fire.
Maybe LR could report the insights of experts rather than pull conjecture out of its butt.
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